Question

An inverstor invest $2,500 into a mutaul fund and earns 5.75% on the principle for each of three years. How much interest has accrued at the end of the period?
a. $413.25b. $4,132.50c. $431.25d. $571.00

Answer 1

Answer:

The correct answer is c) $431.25

Explanation:

• Amount: An investor invests $2,500 into a mutual fund

• Rate: earns 5.75% that is the same of 0.0575

               

• Period: on the principle for each of three years.

$2,500 x 0.0575 x 3 = $431.25

At the end of the period, the investor has accrued $431.25 of interest